2024 (3) TMI 642 - AT - Service Tax

Classification of service - activity of transporting waste from mine head to waste dump yard within the mine leased area - taxable as mining service or as Goods Transport Agency service - expenditure incurred by the appellant on feasibility study for acquiring/procuring coal mines outside India would be classified under Management Consultants Service or not - Cenvat Credit rightly taken on tippers and dumpers supplied to M/s AMR Constructions Ltd during the course of providing output service supply of tangible goods or not - extended period of limitation. Whether the activity of transporting waste from mine head to waste dump yard within the mine leased area, would be taxable as mining service or as Goods Transport Agency service in facts of present case? - HELD THAT - The services are, therefore, primarily of transportation as the assessee is not engaged in winning the ore. Further, there are force in the submission of the appellant that the tenor of the agreement is an important factor while determining the classification. The agreement between the parties simply provides the rate for transportation per tonne from mine head to the dump Yard. Merely because transportation services are being rendered within the mine lease area cannot make the services mining services, unless it is an integrated contract, which includes transportation of waste as well as mining activity, which we find from record is not the case of the department - appropriate classification in so far as the aforesaid activity is concerned would be goods transport agency services and not mining services - no case of suppression or willful misstatement has been made out in the present case as the department is not clear about the classification issue when they had issued the Show Cause Notice. Therefore, the demand of Service Tax confirmed against the appellant is set aside. Whether the expenditure incurred by the appellant on feasibility study for acquiring/procuring coal mines outside India would be classified under Management Consultants Service ? - HELD THAT - The services rendered should be in connection with management of any organization or business. If the services are not related to management of any business or organization, then it would not fall under meaning of the term management or business consultant - issue of classification of feasibility study services is now settled in the case of M/S BMD PVT. LTD. VERSUS CCE, JAIPUR 2016 (12) TMI 1395 - CESTAT NEW DELHI , relied upon by the appellant wherein it has been held that feasibility study would be covered under market research agency service - the demand of Rs.5,63,009/-, confirmed against the appellant, is set aside. Whether Cenvat Credit was rightly taken on tippers and dumpers supplied to M/s AMR Constructions Ltd during the course of providing output service supply of tangible goods ? - HELD THAT - The issue is squarely covered by the precedent decision of this Tribunal in M/S IBC LTD. VERSUS CC, ST, TIRUPATI 2016 (8) TMI 1029 - CESTAT HYDERABAD - it is found that under similar circumstances for the period April 2008 to September 2009 it was held that the for supply of tangible goods namely dumpers and tippers, will need to be considered as primary requirement for providing the output service of SOTG. We also find that insertion of goods like tippers dumpers and equipments as eligible input/capital goods vide notification dated 22/06/2010, is Clarificatory in nature. This is further explained or amplified vide Board instructions/circular dated 23/10/2008. We therefore hold that taking of cenvat credit on tippers and dumpers cannot be said to be irregular. Therefore, the demand confirmed by denying the Cenvat credit of Rs.5,88,51,540/- and Rs.4,94,41,516/- are set aside. Whether extended period of limitation have been rightly invoked? - HELD THAT - Appellant was registered with the department, had been maintaining regular books of accounts and were also filing the returns regularly. The issues involved and are allegations are as a result of change of opinion on the part of revenue. This is evident on the face of record, as for the same service of transportation in mining area, when provided by the Appellant was proposed to be classified as mining service instead of GTA service, on the other hand the same service when received by the Appellant for a different site/mine was proposed to be taxed as GTA services. Accordingly, extended period of limitation is not available to revenue. The impugned order set aside - appeal allowed.

Summary

Issues Involved:
(i) Classification of services for transporting waste within a mine lease area.
(ii) Classification of expenditure on feasibility study for coal mines outside India.
(iii) Eligibility for Cenvat Credit on tippers and dumpers.
(iv) Invocation of the extended period of limitation.

Summary:

(i) Classification of Services:
The primary issue was whether the activity of transporting waste from the mine head to the waste dump yard within the mine lease area should be classified as 'mining service' or 'Goods Transport Agency service'. The Tribunal found that the services were primarily of transportation, as evidenced by the agreement between the parties, which specified rates for transportation per tonne. The Tribunal concluded that the appropriate classification would be 'Goods Transport Agency services' rather than 'mining services'. Consequently, the demand for service tax under 'mining services' was set aside. Additionally, the Tribunal held that there was no suppression or willful misstatement by the appellant, as the department itself was unclear about the classification.

(ii) Feasibility Study Expenditure:
The second issue concerned the classification of expenditure on a feasibility study for acquiring coal mines outside India. The Tribunal found that the Commissioner had misinterpreted the definition of 'Management or Business Consultant'. The services rendered should be in connection with the management of any organization or business. The Tribunal referred to the case of BMD Pvt Ltd v Commissioner of Central Excise, Jaipur, which held that feasibility study services fall under 'market research agency service'. Thus, the demand for service tax under 'Management or Business Consultant service' was set aside.

(iii) Cenvat Credit on Tippers and Dumpers:
The third issue was whether the appellant was eligible to take Cenvat Credit on tippers and dumpers purchased before their inclusion in the definition of capital goods. The Tribunal referred to Board Instructions dated 23.10.2008 and the precedent decision in IBC Ltd v Commissioner of Customs, CE.Ex & ST., Tirupati. It was held that the goods in question were primary requirements for providing the output service of 'supply of tangible goods'. Therefore, taking Cenvat Credit on tippers and dumpers was not irregular, and the demand was set aside.

(iv) Extended Period of Limitation:
Regarding the invocation of the extended period of limitation, the Tribunal found that the appellant was registered with the department, maintained regular books of accounts, and filed returns regularly. The issues arose from a change of opinion by the revenue. The Tribunal held that the extended period of limitation was not available to the revenue.

Conclusion:
The appeal was allowed, and the impugned order was set aside or modified. The appellant was entitled to consequential benefits in accordance with the law. The judgment was pronounced in the Open Court on 14.03.2024.